CHAMBER of Mines president Nathan Chishimba says mining companies are left with no options but to cut jobs and downsize production because of the current economic problems the industry is facing.
In an interview, Chishimba said the commercial viability of mining companies operating in Zambia remained a challenge under the current local and global economic conditions with hard choices that may need to be made.
“Certainly, in the current environment, any increase in the cost of mining will definitely affect some operations which will find it difficult to continue. You will see that some of the weaker players who are less viable and even under more pressure in the current price environment, will definitely be faced with very hard choices going forward, unless there is some very specific and urgent intervention from the authorities,” Chishimba said.
He said while mining companies were trying to avoid making hard choices of laying off workers, the challenging environment left them with limited options.
“It goes without saying that if an enterprise is no longer viable, then those decisions have to be made, which might even include suspending operations as we have seen in the case of some of the companies on the Copperbelt. And these are not decisions you take with pleasure,” Chishimba said.
He also said mining companies were trying hard to control their operational costs in order to stay viable.
“What mines have been doing is basically stripping to the bone, their operating costs, bearing in mind that when you take a decision on labour, it is something that you do with a lot of difficulty. So, rationalisation measures have already been put in place given the various pressures the mines have gone through in the last three, four years,” said Chishimba, adding that Zesco was yet to meet with the Chamber on Mines to discuss the cost implications of the power imports.
“What we are hoping for is that we will have, at some point, an opportunity to highlight those challenges to the authorities so that we can find ways to avoid the difficult decision of letting people go. Going forward, if the current trend continues, definitely, there will be some hard choices to be made.”
The mining sector continues to be hit with a daunting international and domestic climate where copper prices remain stagnant at over US$5,000, while the rising cost of electricity and non-payment of VAT refunds by the government, present fresh challenges to the industry.
Some companies, such as Glencore’s Mopani Copper Mine and Chinese-owned CNMC Luanshya Copper Mine’s Baluba, among others, have made thousands of jobs redundant, with possibly more to follow.